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Why is it Important to reduce your Tax Liability?

As the rates of tax for people and company entities are remaining the same for the 2015 income year, the design opportunities won’t make to any immediate tax windfall. The available methods simply lead to a timing difference for tax functions (unless you’re personal and your marginal rate of tax is less within the 2015 financial gain year). That being said, having more money in your hand creates extra investment opportunities and also the ability to grow your wealth quicker.

Always have interaction the services of a knowledgeable. In the constantly evolving field of tax law and therefore the progressively sophisticated information matching conducted by the ATO (and resultant audit activity), the services offered by a tax agent are getting a lot of important.
Generally, a person’s financial gain is derived and deductions are incurred on a receipts basis. As such, the subsequent opportunities are accessible for an individual to reduce their current year liabilities.

1. Prepayment of deductible expenses:

An individual can claim a deduction for prepaid expenditure for a period not exceeding twelve months. The types of prepayments include:

2. Capital Gains Tax (CGT)

An individual ought to review the gains and losses on every asset inside their investment portfolio before year finish. The outcomes of the review may offer opportunities to:

Realize capital losses to offset any capital gains that were created earlier within the financial gain year.
Defer realization of capital gains till July.
Ensure assets are held greater than twelve months before the sale, therefore, the five hundredth discount may be applied to the gross financial gain.

3. Salary packaging arrangements

An effective regular payment sacrifice arrangement can scale back a person’s marginal rate of tax. The written agreement arrangements ought to be put in place (or reviewed and updated) before year finish as a personal cannot build a regular payment sacrifice arrangement for financial gain already attained. A typical regular payment sacrifice arrangement might embrace the following components: